Retirement looks different for everyone. But if you’re between 57 and 75 you might be staring at your assets wondering what to liquidate. You need cash. Or so it seems. Selling things feels like a solution. Fast money in hand.
Financial experts say pause. Wait. Some things just don’t sell well. Others shouldn’t leave your portfolio at all. Let’s look at why keeping certain things might be the smarter move than dumping them on the market.
The Stock With The Heavy Tax Tag
Selling stock to fund your twilight years? Tempting. It turns paper wealth into real bills paid. Laura Redfern a certified financial planner at Shadow Ridge Asset Management says think again.
“Slow down,” she says. “Consider your other resources.”
Here’s the trick. If you die holding the stock your heirs get a step up in basis. They can sell it for basically zero capital gains tax. Keep it and pay the tax yourself now? That’s losing money.
Scott Sturgeon of Oread Wealth Partners agrees. Unless you’re desperate for cashflow don’t touch the appreciated assets with big gains. They are too good for charity.
Instead of selling them and paying capital gains, they can be gifted to a Donor Advised Fund as part of a larger strategy.
You avoid the tax. You get a deduction. You look like a philanthropist. Pocketing the cash is just expensive.
Life Insurance Policies
It sounds convenient. A company pays you today to take over your insurance policy. You stop paying premiums. They keep the rest.
But here is the catch. The buyer gets the payout when you die. Your kids get nothing. Laura Redfern points out that you likely bought that insurance to help your heirs. Selling it leaves them high and dry.
There is worse. That lump sum check from a viatication deal could disqualify you from need-based programs.
“This type of transaction could prevent qualifying for Medicaid.”
Need help? Call the insurance company. Borrow against the cash value. Convert the policy. Stop paying premiums temporarily. Let the policy pay for itself. Don’t cash out the protection unless you have no choice.
Your House (Unless You Have A Plan)
Selling the family home feels like downsizing. Less cleaning. Less lawn. Quick cash in the bank.
If you have a reverse mortgage though it’s a trap. Reverse mortgages grow like debt. They eat your equity. When you die the house goes to pay the loan. Not to your kids. Not even mostly to them.
“Rather than leaving them an asset… you are leaving them a large debt.”
And don’t fool yourself into thinking the bank pays your property taxes or insurance. You do. Maintenance costs stay. You didn’t really save money you just leveraged the house harder.
Need cash? Look at a HELOC (Home Equity Line of Credit). Talk to an independent planner. Keep the asset. Don’t mortgage your legacy.
Stuff That Means Something
Sentimental items. Family heirlooms. Grandma’s necklace.
Try to sell it. You’ll probably get pennies. You will also regret it.
Scott Sturgeon says give it away. Gift the items to family or friends.
“Consider gifting them to ensure traditions or part of family life on for future generations.”
It keeps the story alive. It cuts clutter. It costs you nothing. Money comes and goes. A chain passed down for generations? That’s harder to replace.
What stays and what goes. Maybe some things never really go anywhere. They just wait for the right person. Or maybe no one.
